EQT Snaps Up Another 14K ‘Core’ Acres in WV for $130M
EQT, one of the biggest and best drillers in the Marcellus/Utica, issued their fourth quarter and full year 2016 update yesterday. As is typical when issuing the updates, EQT’s top brass held a conference call with analysts to discuss results and take questions. In reading through a transcript of the call, one of the most interesting passages (for us) was in the prepared comments by incoming EQT CEO (currently president) Steve Schlotterbeck. In a brief passage excerpted below, Steve provides a quick update on several items: the Mountain Valley Pipeline project, EQT’s Utica drilling program, and the fact that “this week” EQT has purchased an additional 14,000 “core” West Virginia acres in Marion and Monongalia counties for $130 million, which works out to be $9,286 per acre…
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EQT, one of the biggest and best drillers in the Marcellus/Utica, issued their fourth quarter and full year 2016 update yesterday. The bad news is that EQT lost $453 million last year ($192 loss in 4Q16). But the bad financial news was offset by a lot of good news. EQT’s full-year production volumes hit a new high of 759 billion cubic feet equivalent (Bcfe), up 26% from 2015. The company drilled 135 gross wells, including 117 Marcellus wells, with an average length of 7,300 feet. EQT predicts production of 190-195 Bcfe in 1Q17. In 2017, EQT plans to use 6-8 rigs to drill a total of 119 wells in the Marcellus, 81 wells in the Upper Devonian, and 7 wells in the Utica. In a separate announcement also issued yesterday, EQT reports year-end 2016 proved reserves of 13.5 trillion cubic feet equivalent (Tcfe), up 35% from 2015. Below are the two updates from yesterday, along with the latest company PowerPoint presentation, loaded with great slides…
National Fuel Gas Company (NFG) covers the full span of the oil and gas business–from upstream (with its wholly-owned drilling subsidiary Seneca Resources), to the midstream (with wholly-owned subsidiary Empire Pipeline) to downstream (NFG’s natural gas utility service to 740,000 customers in NY and PA). Big company. Diverse operations. Yesterday NFG issued what they call their first quarter update (everyone else’s fourth quarter update), covering October through December. The good news is that NGF swung from losing $189 million in the same period last year, to making an $89 million profit this year. Commenting on what matters most to MDN (the Marcellus/Utica), Ronald Tanski, NFG’s CEO, said this: “We expect to keep moving forward with our plans to build our Northern Access pipeline by the middle of next fiscal year. In the meantime, our efforts will remain focused on the efficient development of our Marcellus acreage to prepare for the Northern Access capacity while continuing to evaluate our opportunities in the Utica Shale on the very same acreage. Together, these stacked formations provide plenty of running room on our acreage and will fuel our growth for an extended period.” Plenty of running room. Sounds good to us! Here’s the update from yesterday…
An accident related to shale drilling is responsible for dumping some (not sure how much) acid mine drainage (AMD) from an abandoned coal mine into the Monongahela River last weekend. Which sounds worse than it actually is. Water that seeps into old coal mines mixes with pyrite (iron-sulfide) and oxidizes, turning the water an orange/brown color. The water becomes somewhat acidic. We previously talked at length about acid mine drainage coming from the Old Forge bore hole near Scranton, and about Marcellus money being used to help clean it up (see 
It’s not often these days we get to witness the birth of a new driller in the Marcellus/Utica, so it’s with great pleasure we announce the birth of S.T.L. Resources. According to an announcement, S.T.L. recently closed on the acquisition of 8,000 acres in the “core of the Marcellus Fairway” in north central PA. Along with the acreage comes “significant in-place infrastructure, current Marcellus production and is prospective for the Marcellus and Utica Shale as well as the Upper Devonian.” The privately-held S.T.L. declined to say exactly where the acreage is located, who they purchased it from and for how much. Why? They continue to try and lease more acreage in the same area and would rather keep competitive information close to the vest. S.T.L. was founded and is run by three veterans in the O&G industry with deep experience in the Marcellus/Utica: William Dressel, Founder and Managing Partner; William Hayward, Chairman & Senior Geological Advisor; and Clinton Coldren, CEO. When you look at a map you find that north central PA includes counties like Potter, Tioga and Lycoming. Which got us to thinking–who might have sold some acreage there? We have a guess…
Quick. Who has the largest core acreage position in the Marcellus/Utica? And which company runs more than one-third of all the rigs operating in the Marcellus/Utica? The answer to both those questions would be Antero Resources. They also have some of the lowest drilling (i.e. breakeven) costs in the industry–and some of the highest hedges (prices they get for the gas). Put it altogether and Antero is one of the most important drillers in our beloved shale plays. Antero won’t release full year 2016 numbers until later this month, but ahead of that, they’ve just released two helpful documents. The first is a press release announcing proved reserves and drilling/development costs. The second is the latest series of PowerPoint slides, the February 2017 company presentation (a preview of the 2016 update). We have both items for you below…
In December MDN reported on the huge West Virginia Supreme Court decision against driller EQT that disallows EQT from deducting post-production expenses from royalty checks, even with signed contracts in place (see 
Yesterday CONSOL Energy released their fourth quarter 2016 results, along with a conference call to discuss those results. A few important items come out of yesterday’s activity. (1) The company lost $321 million in 4Q16. (2) CONSOL, originally a coal-only company, plans to either spin-off or sell the remaining coal assets it owns–this year–completing the process of transforming the company from coal to natural gas extraction. (3) CONSOL produced an average of 101.3 billion cubic feet equivalent of natural gas per day in 4Q16, up 6% from 4Q15. (4) The company shaved a dime off the costs to produce each thousand cubic feet (Mcf) of natgas–from $2.37/Mcf in 2015 to $2.27/Mcf in 2016. (5) Although the company lost money, the shale drilling business saw an increase in revenue in 4Q16 to $280.1 million (a 5.6% increase over 4Q15). (6) Although CONSOL has and continues to drill and complete wells in the Marcellus, their focus for new drilling is the Utica. Here’s the update…
It’s been a while since we’ve updated you on Canadian driller and midstream company Epsilon Energy. As a reminder, Epsilon had a shareholder rebellion in 2013 and threw out the sitting board of directors (see 
Range Resources released details on their proved reserves last Friday. The company reports proved reserves are 12.1 trillion cubic feet equivalent (Tcfe), a 22% jump from 9.9 Tcfe at the end of 2015. Excluding acquisitions and divestitures, Range’s proved reserves were actually up 11%. Range CEO Jeff Ventura said the company replaced 292% of production from its drilling activities in 2016. They have driven down development costs to 34 cents per thousand cubic feet. If it costs an average of 87 cents to gather and get the gas to market (PA IFO estimate), that means it costs Range $1.21 to find, extract and get the gas to market. Range’s announcement was pretty amped-up on their newest purchase of acreage in Louisiana. However, in 2016, almost all of the added proved reserves came in the Marcellus–1,315 out of 1,394 billion cubic feet (or 94%)…
The issue of “setbacks” has always been a contentious issue when it comes to oil and gas drilling. A setback is the distance from a well to nearby structures–like water wells, homes, schools, whatever. In Pennsylvania the state law requires a minimum of 500 feet between a well and nearby structures. But here’s the thing: Do you measure the distance (as drillers maintain) from the bore hole drilled into the ground? Or from the edge of the well pad? A pad is typically 3-5 acres, and if you measure from the edge of the pad, the “actual” distance from the well to a nearby structure may be 1,000 feet instead of 500 feet. Some argue that measuring from the edge of the pad makes more sense–to protect nearby residents from noise, lights, air emissions, etc. But drillers in some locations are hamstrung, especially if the the location where they drill is on a slope or other tough terrain. Measuring from the edge of the pad may mean not drilling at all. It is that very issue now being debated in Murrysville, in Westmoreland County, PA (near Pittsburgh). It is a wisdom of Solomon kind of issue…
Many of the large integrated oil and gas companies produce an annual report that looks out over the next 20 years. Their best researchers peer into their crystal balls and make predictions about what will happen–and why. BP is one such company. Earlier this week BP released their annual “Energy Outlook – 2017 edition” (full copy below). The big news in the outlook, for us, is finding out that BP predicts LNG (liquefied natural gas) sales will grow seven times faster over the next 20 years than gas sold via pipelines. Making LNG a VERY important part of our future…
National Fuel Gas Company (NFG), the Buffalo-based utility giant with both a drilling subsidiary (Seneca Resources) and a midstream/pipeline subsidiary (Empire Pipeline) filed an application with the Federal Energy Regulatory Commission (FERC) in March 2015 for a pipeline project they call Northern Access 2016 (later renamed to simply Northern Access Project, dropping the “2016” part). The $455 million project includes building 97 miles of new pipeline along a power line corridor from northwestern Pennsylvania up to Erie County, NY. The project also calls for 3 miles of new pipeline further up, in Niagara County, along with a new compressor station in the Town of Pendleton (see 
EXCO Resources still has 145,000 net acres in the Marcellus with 124 horizontal Marcellus wells drilled and in production. However, they have pretty much abandoned the Marcellus at this point. EXCO was officially warned by the New York Stock Exchange last week that their stock is in danger of becoming delisted on the NYSE. Sound familiar? It should. The NYSE warned EXCO of the same thing in March 2016 (see 
Rex Energy, a driller focused mainly on the Marcellus/Utica (headquartered in State College, PA), released their fourth quarter and full year 2016 operational update yesterday. As seems to be the trend with many drillers, Rex has released the “good news” about how they produced, etc. ahead of releasing their financial statements (which have tended to be the bad news). What do we find in the Rex update? Production of all hydrocarbons was up 12% when comparing 4Q16 with 4Q15, and up 6% when comparing all of 2016 with all of 2015. However, when you dig a little bit, you discover that Rex’s methane (dry gas) production was down slightly when comparing 2016 with 2015, which we attribute to lack of drilling new wells. Here’s the update…